USA – NEW JERSEY Trends and Developments Contributed by: Galit Kierkut and Martin C. Fojas, Greenberg Traurig, LLP
The best way to ensure that this test is met for com - panies with significant confidential information is to put into place a trade secret protection plan. That plan must, at a minimum, ensure that the company has agreements with all employees and with third parties to whom confidential information is disclosed, pro - tecting the information. The plan should also imple - ment written policies regarding how that information is protected, limit access to confidential information, train employees on those policies, and enforce the policies. When an employee who has had access to significant confidential information joins a competitor, the company should also have specific plans in place as to how to address that departure, including pres - ervation of equipment, assessing whether employees actually took information with them and potentially the conducting of forensic examinations by qualified third- party examiners who can ultimately testify if a matter goes to litigation. Alleging misappropriation in New Jersey litigation Under the NJTSA, misappropriation is defined as: • acquisition of a trade secret of another by a person who knows or has reason to know that the trade secret was acquired by improper means; or • disclosure or use of a trade secret of another with - out express or implied consent of the trade secret owner by a person who: (a) used improper means to acquire knowledge of the trade secret; or (b) at the time of disclosure or use, knew or had reason to know that the knowledge of the trade secret was derived or acquired through im - proper means; or (c) before a material change of position, knew or had reason to know that it was a trade secret and that knowledge of it had been acquired through improper means. Thus, in New Jersey, the plaintiff is not required to plead that the defendant actually used or disclosed the trade secret. Allegations that the defendant acquired the trade secret through improper means are sufficient to support a trade misappropriation claim. Moreover, when pleading misappropriation by use or disclosure, the plaintiff is not required to plead
detailed allegations about how the defendant used or disclosed trade secrets. Rather, the plaintiff must demonstrate that the trade secret was acquired, used, or disclosed through improper means. “Improper means” is defined under the NJTSA as “theft, bribery, misrepresentation, breach or inducement of a breach of an express or implied duty to maintain the secrecy of, or to limit the use or disclosure of, a trade secret, or espionage through electronic or other means, access that is unauthorized or exceeds the scope of authorization, or other means that violate a person’s rights under the laws of this State”. Improper means are distin - guished from “proper means” of acquiring the infor - mation, such as “independent invention, discovery by reverse engineering, discovery under a license from the owner of the trade secret, observation of the infor - mation in public use or on public display, obtaining the trade secret from published literature, or discovery or observation by any other means that is not improper”. Threatened misappropriation and inevitable disclosure Trade secret claims may be based upon threatened misappropriation as well as actual misappropriation. New Jersey recognises a claim for threatened misap - propriation based on the doctrine of inevitable disclo - sure. Under the inevitable disclosure doctrine, where an employer’s former employee begins working for a competitor, the employer does need to establish that its former employee has actually used or disclosed a trade secret, but that there is a sufficient likelihood that the former employee will inevitably disclose or use trade secrets by working for the competitor. The inevitable disclosure doctrine is frequently raised in an application for a preliminary injunction against an employer’s former employee and their new employer. The plaintiff must satisfy the usual requirements for seeking temporary or preliminary injunctive relief. However, in New Jersey, courts typically find that inevitable disclosure of a trade secret qualifies as irreparable harm. Courts do not require proof of actual misuse or disclosure, but may infer inevitable disclo - sure where the former employee’s role at a compet - ing company would require the use of the confidential
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